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Faiz Khan Explains State Of Fiji Pine, Airports Fiji When He Took Up Office

Many people are intrigued by executive chairman of Fiji Pine Group and Airports Fiji Limited, Faiz Khan’s recent message. This was that inefficient and poorly run state-owned enterprises should not
29 Aug 2015 10:53
Faiz Khan Explains State Of Fiji Pine, Airports Fiji When He Took Up Office
Executive chairman of Fiji Pine Group and Airports Fiji Limited, Faiz Khan.

Many people are intrigued by executive chairman of Fiji Pine Group and Airports Fiji Limited, Faiz Khan’s recent message.

This was that inefficient and poorly run state-owned enterprises should not benchmark themselves against past performances.

Mr Khan states that it is this mindset that brought about around 500 per cent profitability turnarounds at both Fiji Pine and Airports Fiji.

We asked him to elaborate why he thinks the way he does and whether other state-owned enterprises should aim at improving their performances by 500 per cent.

We quote his interesting feedback below and hope Mr Khan’s message is one that makes us think further to change and evolve.

“At both Pine and Airports, we have either seen or will see around 500 per cent turnarounds in four years,” he said.

“This is sheer coincidence and not by any design. I make the point that had we compared ourselves to past inefficient performances and said ‘let’s grow by 10 per cent every year.

“We would have had about 46 per cent growth (compounded) in profitability in four years.

“Instead we have had 500 per cent growth as a result of not benchmarking against past inefficient results that allowed us to discover the potentials of both Pine and Airports.”

 

Background thinking

Mr Khan said one had to understand a bit of background that has led to his thinking.

“When I joined Fiji Pine, I was told by finance that we had a current ratio of 0.65, that we had about $3 million of unreleased stale cheques sitting with the accounts office at any one point in time because of lack of funds,” he said.

“That we had trade creditor aging in excess of 300 days, were unable to service long term debt repayments, and would shut down in two weeks time!

“At that time I made a choice of not looking at the P&L and BS because had I done so I would have become paralysed.

“Fear of collapse may have overtaken my thought process and we may not have been successful in salvaging the sinking ship. It worked.

“It allowed us to re-look at all relationships with an open mind and the results are what they are today.”

Airports Fiji, on the other hand, Mr Khan said was a $10 million profit company.

“Relatively speaking, one of the best state-owned enterprises, declaring $1 million dividends, passing all end of the year audits with flying colors, etc,” he said.

“We could have been satisfied with $10 million mediocre profit results but would not have been able to grow our human and infrastructure capital.

“We would not have been able to declare dividends reasonable to Government’s present value capital contributions over the last century.

“So we used the same principles in restructuring the costs and revenue structures of the Airports Fiji as we did at the struggling Fiji Pine.”

 

What they did?

Mr Khan said they put the past profit and losses in the drawer and started re-looking at all their relationships to try to find fair equilibriums.

Result – they had similar success.

“The moral of trying to find equilibriums in business relationships is to achieve mutual benefit,” he said.

“To bring about equilibrium in relationships you may have to persevere for years but it usually works because no one can truly argue with fairness.

“Can we now benchmark and say that all state-owned enterprises must turnaround by 500 per cent? No. Each company is different.

“The people running the companies need to discover what their potential is. But they definitely will struggle to do so if they benchmark against past inefficient results.

“Can we benchmark against the results after the successful restructure? Yes, possibly.”

Feedback: rachnal@fijisun.com.fj

 

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